Philip Morris Q1 2025 slides: Double-digit growth as smoke-free products surge

Philip Morris International (NYSE:PM) reported impressive first-quarter 2025 results on April 23, showcasing double-digit organic growth in both revenue and earnings, primarily driven by its expanding portfolio of smoke-free products. The tobacco giant’s shares jumped 4.74% in premarket trading to $171.89, reflecting investor enthusiasm for the strong performance.

Quarterly Performance Highlights

Philip Morris delivered robust financial results across key metrics in Q1 2025. The company reported net revenues of $9.3 billion, representing 10.2% organic growth and 5.8% growth including currency and acquisitions/divestitures. Adjusted operating income reached $3.8 billion, up 16.0% on an organic basis, while adjusted diluted earnings per share hit $1.69, marking a 12.7% increase including currency effects.

Total (EPA:TTEF) shipment volume grew 3.9% organically to 188 billion units, with particularly strong performance in the smoke-free segment. The company also achieved significant margin expansion, with adjusted gross profit margin increasing by 360 basis points to 67.4%.

As shown in the following comprehensive performance overview:

"We’ve had an excellent start to the year, with double-digit organic top and bottom-line growth and operating income margin expansion to over 40%," the company noted in its presentation, highlighting the continued success of its smoke-free transformation strategy.

Smoke-Free Products Growth

The company’s smoke-free portfolio, including IQOS heated tobacco, ZYN nicotine pouches, and VEEV e-vapor products, continued to drive overall growth. Smoke-free product shipment volumes increased by 14.4% compared to the previous year, reaching 43 billion units in Q1 2025.

The company’s multicategory approach is gaining traction globally, with 16 markets now offering three PMI smoke-free product categories, 30 markets with two categories, and 49 markets with one category.

The breakdown of volume growth by product category illustrates the company’s diversified smoke-free strategy:

IQOS heated tobacco units (HTUs) maintained strong momentum with 9.4% growth in Q1 2025, while the company’s ZYN nicotine pouches showed exceptional performance. U.S. ZYN shipments reached 202 million cans in Q1 2025, up from 132 million cans in Q1 2024, representing over 50% growth year-over-year.

The following chart demonstrates ZYN’s remarkable growth trajectory in the U.S. market:

International expansion of ZYN also showed impressive results, with shipment volumes increasing 53% year-over-year to 21.7 million cans. Excluding Nordic markets, international ZYN growth was even more dramatic at 182%.

Meanwhile, VEEV e-vapor products more than doubled in volume, reaching 632 million equivalent units in Q1 2025 compared to 305 million in Q1 2024. This acceleration in VEEV momentum is illustrated in the following chart:

Market Share Gains

Philip Morris continues to gain market share in key markets globally. In Japan, a critical market for heated tobacco products, the company’s heated tobacco category share reached 47.8% in March 2025, up 3.4 percentage points versus the previous year. The company noted that in 13 Japanese cities, its share exceeded 50%.

In Europe, IQOS continues to gain traction, with particularly strong performance in markets like Hungary (41.9% share), Athens (34.4%), and Rome (31.0%). The following map illustrates the company’s HTU offtake share across major European cities:

Combustibles Performance

Despite the company’s strategic pivot toward smoke-free products, its traditional combustible cigarette business also delivered solid results. Cigarette shipment volumes increased by 1.1% to 144.8 billion units in Q1 2025.

The combustible segment continues to demonstrate strong pricing power, with 8.3% pricing growth in Q1 2025. This pricing strength, combined with volume growth, contributed to a 5.3% increase in combustible gross profit on an organic basis.

The following chart shows the consistent pricing power in the combustible business:

2025 Outlook & Guidance

Based on the strong Q1 performance, Philip Morris raised its full-year guidance for 2025. The company now forecasts:

• Total shipment volume growth of up to 2%
• Smoke-free product shipment growth of 12-14%
• Net revenue growth of 6-8% on an organic basis
• Operating income growth of 10.5-12.5% on an organic basis
• Adjusted diluted EPS growth of 12-14% in USD terms, to $7.36-$7.49

The company’s outlook reflects confidence in its ability to navigate macroeconomic uncertainties while continuing to execute its smoke-free transformation strategy.

"We’re well-positioned to navigate external volatility," the company stated in its presentation, highlighting the "powerful combination of underlying momentum and proactive steps" that supports its best-in-class growth profile.

Strategic Initiatives

Philip Morris continues to advance its strategic vision of "Delivering a Smoke-Free Future." The company’s multi-category approach across heated tobacco, oral nicotine, and e-vapor products is driving both volume growth and margin expansion.

The smoke-free transformation is delivering meaningful value for shareholders through superior economics compared to traditional cigarettes. As smoke-free products represent a growing portion of the company’s business, overall profitability is improving, as evidenced by the 340 basis point expansion in gross margin on an organic basis in Q1 2025.

"Smoke-free top-line growth with superior economics" and "investing for growth while driving profitability through mix, pricing, scale and efficiencies" remain core elements of the company’s strategy, according to the presentation.

Philip Morris’s Q1 2025 results demonstrate that its smoke-free transformation continues to gain momentum, positioning the company for sustained growth despite challenges in the broader consumer packaged goods sector.

Full presentation:

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